OPINION I Mint

In the lead-up to elections, Indian politics frequently centres around promises of state-sponsored ‘freebies’—or giveaways aimed at winning voter support. These range from free electricity and water to subsidized rice and laptops. Such handouts have become a staple of political manifestos, offering immediate relief to certain groups. However, they also spark concerns over fiscal strain, regional imbalances and long-term viability. Instead of an outright ban, a more constructive approach would be to set up frameworks that promote transparency, fiscal discipline and focused delivery of genuine welfare initiatives.

The practice of announcing freebies has gained momentum in recent decades, with political parties using them as a tool to secure votes. Delhi, for instance, provides free electricity up to 200 units, free water, free bus rides for women and subsidized religious trips for senior citizens. These initiatives have been highly popular and politically effective. However, Delhi’s relatively high per capita income of ?414,711 (2020-21) allows the government to fund such schemes without much fiscal strain. Similarly, Tamil Nadu, with a per capita income of ?212,174 and Maharashtra with ?183,704 are better placed to implement subsidy-based schemes. In contrast, states like Bihar, which has a per capita income of just ?50,735, struggle to provide even basic services, let alone freebies. This regional disparity highlights the uneven nature of freebie politics, where wealthier states can afford such measures but poorer states are left behind.

Globally, over-reliance on populist freebies has led to significant economic challenges. Greece, for example, faced a severe financial crisis in the 2000s partly due to excessive welfare spending that was not backed by adequate revenue. The Greek government had long promised generous pensions and social benefits, which led to unsustainable fiscal deficits. Eventually, Greece was forced to adopt strict austerity measures, cutting back on public benefits and plunging the country into social and economic turmoil. Sri Lanka too recently faced a similar crisis after years of unsustainable subsidies for fuel, food and electricity. The result was a financial meltdown that forced the government to impose harsh austerity measures, leaving citizens worse off than before.

Some countries, however, have struck a balance between welfare and fiscal discipline. Singapore, for example, offers targeted subsidies that focus on essential sectors like healthcare, housing and education, while maintaining a strong emphasis on self-reliance. The Central Provident Fund (CPF), a compulsory savings scheme, encourages citizens to save, with the government providing matching contributions. This system ensures that welfare is available when needed, but also encourages financial responsibility and reduces the long-term burden on the state. Singapore’s model demonstrates how institutional frameworks can ensure that welfare benefits are delivered effectively without compromising the fiscal health of the country.

In India, the Election Commission and other regulatory bodies could play a critical role in enforcing transparency and accountability in the announcement of freebies. Instead of banning them outright, governments could be required to disclose the funding sources for each proposed scheme and provide a clear economic impact assessment. This would help voters make informed decisions based on the long-term sustainability of these promises rather than short-term allure. For instance, if a party promises free electricity, it should also explain how it plans to finance it—through higher taxes, borrowing or cuts in other services. Such a mechanism would prevent political parties from making extravagant promises that cannot be fulfilled without harming the state’s financial health.

A key problem with freebies is their universal nature. Instead of targeting the most vulnerable, many of these schemes benefit even those who do not need them. For example, in Delhi, the free electricity scheme applies to all households, regardless of income levels. This leads to a situation where even the wealthy benefit from state subsidies. Institutional reforms can ensure that welfare programmes are targeted at those who genuinely need them. Means-testing and targeted subsidies would ensure that limited state resources are used efficiently, helping the most vulnerable.

The focus should be on creating policies that empower citizens in the long run rather than fostering dependency. States like Kerala have demonstrated the benefits of long-term investments in education and healthcare. Kerala’s near-universal literacy rate and strong public healthcare system have contributed to better social and economic outcomes, even though the state does not rely heavily on freebies. By investing in human capital, Kerala has created a more self-reliant population that can contribute to the state’s economic growth rather than depend on state handouts.

Similarly, Punjab’s free electricity for farmers has led to unintended consequences like overuse of groundwater and environmental degradation. While the policy was initially introduced to support agricultural productivity, it has created a cycle of dependence and resource depletion. Punjab’s experience highlights the need for environmentally sustainable policies that focus on long-term productivity rather than short-term gains.

Instead of focusing on handouts, political parties should prioritize policies that create employment opportunities, improve infrastructure and build human capital. Investments in education, healthcare and job creation offer long-term solutions to poverty and inequality, helping people rise above their circumstances without relying on government subsidies. By providing citizens with the tools to improve their lives, governments can promote self-reliance and reduce the need for constant state intervention.

So, while freebies may provide short-term relief, they are not a sustainable solution to India’s long-term development challenges. But, instead of banning freebies altogether, the focus should be on creating institutional frameworks that ensure transparency, fiscal responsibility and targeted welfare. By regulating the use of freebies and promoting more sustainable development policies, India can achieve a balance between social welfare and economic stability. This approach will not only empower citizens, but also ensure the country’s long-term prosperity and democratic integrity.